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Introduction
On 5th January 2026, the Government of Malta, through the Ministry for Social Policy and Children's Rights, launched a public consultation on the 'Strategic Review of the Adequacy, Sustainability, and Solidarity of Malta's Pension System'. The consultation, which is open until 3rd April 2026, invites feedback from workers, pensioners, employers, and the wider public.
This review is conducted every five years in accordance with Article 64B of the Social Security Act. Its purpose is to assess whether the pension system continues to provide adequate retirement income, remains financially sustainable in the long term, and distributes responsibilities fairly across society. The review serves as a basis for consultation and informed discussion rather than a final policy position.
Current Position of the Pension System
The 2025 Strategic Review finds that Malta's pension system is 'fundamentally sound' at present. Recent pension increases, improved tax treatment of pension income, and enhanced support for carers and persons with disabilities have strengthened income security among older persons. Higher employment levels have also supported social security contributions.
Nevertheless, the review stresses that these positive developments must be viewed against longer‑term demographic pressures.
Demographic and Economic Challenges
Malta is undergoing significant demographic change, with life expectancy increasing and birth rates remaining low. Consequently, the proportion of older people is projected to rise, while the working‑age population declines.
Over time, this will result in fewer workers supporting a growing number of pensioners. Although strong employment and inward migration have helped ease pressure on the system in recent years, these factors are subject to change and cannot, on their own, ensure long‑term sustainability.
Why Future Planning is Necessary
The 2025 Strategic Review considers a 'no‑reform' scenario in which current policies remain unchanged. In broad terms, it indicates that, over time, pensions may replace a smaller share of earnings, pension expenditure would place increasing strain on public finances, contribution income may fall short of rising costs, and the gap between income and expenditure would continue to widen.
The Role of Voluntary and Occupational Pensions
A key theme of the consultation is the need to strengthen retirement savings beyond the state pension. Malta's system remains heavily reliant on the state contributory pension, while participation in voluntary and occupational pension schemes is still limited. Despite recent incentives and awareness‑raising, only a small proportion of the working population actively contributes to private or workplace pension arrangements.
To address this, the Government is exploring the introduction of an automatic enrolment framework for voluntary occupational pensions. Under such a system, employees would be enrolled automatically into a workplace pension scheme, while retaining the right to opt out. In the 2026 Budget, the Minister for Social Policy and Children's Rights noted substantial progress towards introducing an auto‑enrolment mechanism, with broad support from social partners, while also confirming that further work is underway to finalise the legal and regulatory framework.
The aim is to normalise long‑term retirement savings, strengthen private and occupational pension coverage, and gradually reduce pressure on the state pension system over time.
An Open and Participatory Process
The public consultation includes fourteen targeted questions addressing matters such as pension adequacy, cost‑of‑living adjustments, contribution gaps linked to caregiving, minimum pension levels, and the future role of private and occupational pensions.
The 2025 public consultation provides an opportunity for workers, employers, pensioners, and civil society representatives to contribute to the development of a pension system that is responsive to Malta's evolving social and economic environment. The consultation is now open, and members of the public are invited to submit their feedback by 3rd April 2026.
The public consultation may be accessed through the following link:
https://govcms.gov.mt/en/publicconsultation/Pages/2026/NL-0001-2026.aspx
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